Creditors move on Jetlink to protect their claims

(eTN) – The High Court in Nairobi has granted what must be the first of several applications by creditors of grounded privately-owned Kenyan airline, Jetlink, as the owners of four of the carrier’s CRJ200 jets have moved to get them “taken into CAA custody.” According to a source in Nairobi, Mexico CRJ Ltd. applied to have their interests safeguarded following Jetlink’s failure to pay the leases on time, now reportedly overdue by 3 months.

Jetlink is now at the mercy of both the South Sudan government and the Kenya government to find a mechanism to get over US$2 million held in South Sudan pounds in banks in Juba repatriated so that pending lease fees, fuel, salaries, and regulatory charges can be paid and the airline may resume operations.

The longer that will take, however, with the potential of more legal cases looming large, and the more difficult it will be to get back into the air. “The dam has broken here for Jetlink as the first of their creditors has swooped in and got a court order ahead of the others to secure their aircraft. I think others might now swiftly follow to protect their debts, too, like fuel companies, their handling agents, other suppliers of spare parts and so on, and maybe even CAA and KAA for fees of parking, navigation, landing. When that starts, it makes it very difficult to resume operations because then [the] legal process takes over.

“Even if they get their money out of South Sudan, it will be very difficult for them, because supplier[s] will put them on [a] cash basis with no credit extended any longer until they have settled their bills and restored market confidence,” a regular aviation source from Nairobi said before adding, “The biggest beneficiary here will be Kenya Airways [KQ], because other private airlines which as you know also have legal cases pending, they are now also under scrutiny. Jetlink sold tickets right up to the time they stopped operations. Passengers had to buy fresh tickets with no refunds yet. So while everyone has confidence in Kenya Airways that when you pay for your ticket you will actually fly, that may not be so with other competitors.

“Travelers will seriously think who might be next, and so KQ is the one safe bet they think of. Kenya Airways will have taken the lion’s share of passengers for Mombasa, Eldoret, and Kisumu from Jetlink’s passenger pool and, of course, for Juba. KQ might have a similar problem getting their money out from there, but their other operations keep the cash coming so they can wait from a better position. Our other Kenyan airlines flying to Juba, however, might feel the pinch much harder.”

In related news, the arrival of Kenya Airway’s new Director of Marketing, Chris Diaz, has already shown results as the airline has launched a number of promotional fares in Uganda and served notice of intent to aggressively market their services and allow holders of frequent flyer loyalty cards to earn miles in the process.